The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 (the “Act”) has been signed into Irish law by the President, and will require a Ministerial Order to commence.What does the new Act mean for employers and employees where staff receive tips?
What does the Act do?
The Act principally makes amendments to the Payments of Wages Act 1991 and provides for the fair distribution of tips and gratuities.
One of the key points in the Act is that tips which are given by electronic means should be distributed fairly to the employees. Importantly, it will also be Illegal to use tips or gratuitiesto make up the basic wage.
The employer will need to provide a tips and gratuities notice which explains whether or not tips are distributed amongst employees, the way in which tips are distributed and whether any mandatory charges are also distributed to employees, and if so in which way. Employees should also be consulted where employers propose to change the way in which tips and gratuities are distributed.
Further, employers will have to provide a statement to employees within 10 days from the distribution of the tips which outlines the total amount of tips distributed and the amount distributed to the individual employee.
What about mandatory charges compared to tips and gratuities?
The Act provides clarity on what is, on the one hand, a mandatory charge, and a tip or gratuity on the other hand.
The definition of a mandatory charge is a contractually imposed and receiptedpayment that a customer has to pay in order to receive goods or services, whereas a gratuity or tip is a voluntary payment made by a customer which it is assumed will go to the employer, employee or a group of employees.
What if an employer carries out similar work to the employees?
An employer will be entitled to retain tips where the employerregularly performs, to a substantial degree, the same workperformed by some or all of the employees, but that also has to be distributed evenly taking into consideration the work performed by the employer.
What if an employer fails to comply with the legislation?
Where employers fail to comply with the Act, they would be liable under summary conviction to a class C fine of a maximum of €2,500.
What will an Adjudication Officer take into consideration at the Workplace Relations Commission if an employee brings a complaint regarding whether the distribution of tips has been fair?
Interestingly, the Act provides for certain issues which an Adjudication Officer should take into consideration when dealing with a complaint under the Act, including:
the seniority or experience of the employee;
the value generated by the employee in eg sales or revenue;
the proportion or number of hours worked by the employee;
whether the employee is a full-time or part-time employee;
the role and influence of the employee in providing the services to the customer;
whether there was consultation with the employee on the manner of distribution; and
whether there was an informal or formal agreement on the distribution of tips.
Conclusion
The Act brings about changes which will require certain industries to review their policies on tips and gratuities and will need to have statements in place on how they distribute these amongst staff for transparency both internally and to customers.
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